SCOTIA-ASIAN SECURITY AND ANOTHER v. SECUNITY AND SAFETY LTD

1985 No. A6773

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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DECISION

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1. This is an unusual case. It is common ground that I should give directions for a speedy trial. The issue is whether I should, between now and the trial, grant an interlocutory injunction or accept a limited undertaking which is being offered by the defendant. The background is simply this. The Special Air Service achieved a certain reputation/notoriety in the last war and since. This has created some aura around the initials "SAS". Both the parties in this suit seek to derive benefit from that aura. The plaintiff was the first in the field. The first plaintiff, an unincorporated body, started in business in 1981. The 2nd plaintiff, a limited company in 1982. The companies have been trading under the logo "SAS" written in a particular form.

2. This year, the defendant entered the market. They are a wholly-own subsidiary of the Guardian Property Management Ltd. which has, in accordance with the family table before me, eight such subsidiaries of which the plaintiff is one and probably the newest. Guardian Property management as its name implies, manages a large number of properties. The defendant company was formed to provide securities services for the properties which Guardian manages. At the time of that formation, it is asserted in ignorance of the use by the plaintiffs of this logo, the defendant company adopted the same initials "SAS"; and having adopted "SAS" then chose a company name which was consistent with those initials i.e. Security and Safety. The only difference between the two groups, between the plaintiff and the defendant, is that the letters "SAS" are in their publicity material written in a slightly different script.

3. It is in those circumstances that the plaintiffs come before the Court and asked for an interim injunction to restrain the use by the defendant of this logo until trial or further order. The basis of their alleged cause of action is passing off. I have been referred, not unnaturally, to the principles of American Cyanamid Co. v. Ethicon Ltd. (1975) AC 396 particularly as explained or interpreted by Megarry V.C. in Mother Care Ltd. v. Robson Books Ltd. (1979) FSR 466. In the course of giving an explanation, which involved reconciling the three different phrases Lord Diplock had used in giving the leading speech in the American Cyanamid case, the Vice Chancellor sums up his views in this way. "All that has to be seen is whether the plaintiff has prospects of success which in substance and reality, exist. Odds against success no longer defeat the plaintiff, unless they are so long that the plaintiff can have no expectation of success, but only a hope. If his prospects of success are so small that they lack substance and reality then the plaintiff fails, for he can point to no question to be tried which can be called 'serious' and no prospects of success which can be called ‘real' .”

4. If one applies that test to circumstances like the present, it is perfectly possible for a Court quite properly to conclude that an interlocutory injunction should be granted, without having any sort of serious look at or examination of the chances of the plaintiff actually succeeding at the trial. Indeed that sort of inquiry is what the decision in Ethicon was intended to avoid; anything which partook of a trial on affirmation. That is particularly important in a case like this, where serious questions are raised on the evidence as to the nature and extent of the reputation of the plaintiffs in the security field; about the number of people who are aware of the plaintiffs' business, and who associate this logo and these initials "SAS" with the business of the plaintiff. This is of course crucial in a case of this nature, which primarily depends upon the prospects of confusion in the minds of those members of the public who are customers or potential customers of the plaintiffs. You can only have confusion in the minds of a potential customer who is aware of the plaintiff's reputation and the plaintiff's existance. There is no question of the Court being able, on conflicting affirmation evidence, to determine that matter. It is essentially one for the trial. But equally upon the evidence before me, it does not seem possible for this Court to conclude that there is no substance in the plaintiff's prospects of success or that the plaintiff has "no expectation of success but only a hope. "

5. This is a delicate matter for a Court, in circumstances like this, when the practical effect of an injunction may well be to grant the plaintiff victory in the action, by its decision at an interlocutory stage. Because an interlocutory injunction granted on Ethicon principles which exhypothesi have not involved a decision on the merits, may constitute, in substance, a final judgment in the plaintiff's favour. The effect on the defendant in these circumstances can be catastrophic. They have to continue their business. They therefore have, if restrained by injunction from using a particular logo, to abandon that logo. They would have in this case, to redesign the uniforms; remove the initials "SAS" from shoulder straps, shoulder flashes, buttons, cap badges whatever they are; and likewise, remove the logo "SAS" from all letter paper and start again. In practical terms, it really means that they have got to rejig their whole business pending suit. This is particularly so when I am told (and I have no difficulty in accepting in this case), that the whole set-up started with the adoption of these initials "SAS" and everything would then geared to that purpose.

6. I believe that the Court in such circumstances, is faced with a delicate balancing act, in applying true principles i.e. Ethicon, to these sort of circumstances. One of the crucial factors which I have not yet mentioned, is that the defendant company having been established by Guardian Property Management Ltd., has been working exclusively heretofor for companies in that group, and for the Guardian Property Management Ltd. itself. When I say 'established', the company was in fact bought off the shelf and the name was changed. This means that in its brief life, which seems to have commenced effectively from some time in, I think, August of this year, nobody who has entered into contracts with the defendant company, can, as I see it, possibly have been confused. All the contracts that have been made had been made with Guardian, the controlling company, or with some other company in the Guardian family. It has been operating solely within that family. Therefore there has been no actual deception, no prospect of confusion in the minds of any of the defendant's actual customers. It follows from that that the real risk, as I see it, for the plaintiff company will start to operate crucially, when the defendant company moves into the open market, and offers its services directly to precisely the same persons as the plaintiff is offering its services. That has not yet happened. I accept that this may not totally quieten the plaintiff's concern, and there may be substance in the point urged upon me by the plaintiff that they are not only concerned with actual customers but potential customers, and some of the potential customers who may be considering employing the plaintiff company are the residents in the blocks of flats at which the defendant's uniformed security men now attend. I agree that this is a risk, but I am bound to say that I see it at this moment as being a somewhat remote risk, in the period of time which I am considering which is that between today and the time when a speedy trial of this hearing might take place.

7. I am therefore faced with the choice between accepting an undertaking from the defendant between now and the date of speedy trial, not to alter the scope of the present business, not to offer its services or to enter into a contract with anybody who is not an existing customer or any body who is not a member of the Guardian Group. The precise wording of that undertaking will no doubt be have to be looked at in a moment in a little more detail. That is the defendant's offer. The contrary view is that urged upon me by the plaintiff which is that I should grant an injunction restraining the defendant from using the logo at all in the intervening period, with everything that that involves in the adjustment of the plaintiffs business.

8. Much has been said about damages both ways. I accept that if there was a serious risk of potential customers of the plaintiffs being confused in this brief intervening period, then the plaintiffs may well be able to assert that they are likely to suffer irreparable damage in the sense that is used in this particular field: damage which it may be exceedingly difficult to establish and quantify. But having regard to the limits of the persons who can be confused, that does not seem to me to be right. Conversely, I accept that if I was to stop the defendant from using this logo, the costs of stopping and then rejigging after the event, win, lose or draw in the action, could probably be precisely quantified, and I can see no reason for doubting the plaintiffs ability to pay that pursuant to an undertaking in damaging.

9. It follows that many of the matters which one has to consider in these circumstances, are very nicely balanced. But I believe that the decisive consideration here is that the risks, as I see them, say in the next 6 months, to the plaintiffs are slight: the costs of confusion to defendants are considerable: there are serious questions to be tried at the trial which may go either way: and an interlocutory decision now by me could amount, in all probability, de facto to a judgment one way or the other. In these circumstances, I think my proper course is to accept an undertaking along the lines that I have indicated from the defendant, pending a speedy trial, and to direct that a speedy trial takes place.